Utkal Reporter Bureau
Bhubaneswar|19 September 2017
Odisha Government has received its first proceeds from the much talked about Paradip refinery of Indian Oil Corporation (IOC)..The amount is Rs2935crore.
An IOC statement of 19 September read, “IndianOil has paid Rs. 2,935 crore to the Government of Odisha today towards VAT payment for the period Nov. 2015 to July 2017”
The payment complies with a revised formula settled between IOC and the Government of odisha last month after Odisha Chief Minister Naveen Pattnaik and Union Petroleum Minister Dharmendra Pradhan talked in Delhi on August 18 to resolve the tax issues around Paradip refinery.
As per the fresh understanding Odisha government agreed IOC enjoy 15 years of deferment period of VAT payment on the products of Pardip refinery sold in Odisha. In the Original MOU of 2004 it was for 11 years.However the cap was fixed at Rs700 crore per annum.
Based on the follow-up discussions held in the Joint Working Group under the Chairmanship of Secretary (Petroleum), and consisting of senor representatives of Indian Oil and the State Government, it was agreed that Odisha Government will henceforth receive regular VAT/GST revenue from Indian Oil, out of which Rs. 700 crore per annum will be given as interest-free loan to Indian Oil for 15 years.
IndianOil’s investment of over Rs. 40,000 crore in Paradip Refinery and allied facilities is the single largest investment by a corporate in Odisha. Further investments are in the offing, including expansion of refining capacity, and downstream petrochemical options like Polypropylene, Mono Ethylene Glycol, Paraxylene, Petcoke gasification.
IndianOil in 2004 had signed a binding Memorandum of Understanding with the Government of Odisha whereby the State Government extended several incentives to IndianOil for setting up Paradip Refinery. One of the major incentives was in the nature of interest-free loan equivalent to the sales tax/VAT payable to the State of Odisha on sale of products during the first 11 years’ operation of the refinery from the date of commencement of commercial production. IndianOil commenced the construction of the refinery in March 2009 and started commercial operations in November 2015.
After completion of the Refinery, the State Government decided to review the fiscal incentive and withdrew it citing reasons of delay in completion of the project, favourable economic conditions and increase in the size of the refinery from 9to 15 million tonnes per annum.
IndianOil approached the High Court of Odisha against the withdrawal of the fiscal incentive. The High Court granted a stay in favour of IndianOil and asked both the parties to settle the issue through a Joint Working Group.